Ed Butowsky, Schwab head to arbitration over $100 million defamation claim

Ed Butowsky, Schwab head to arbitration over $100 million defamation claim
The adviser claims Charles Schwab defamed him and poached his clients.
MAR 08, 2019

A $100 million defamation lawsuit that financial adviser Ed Butowsky filed against Charles Schwab & Co. is headed to arbitration. Mr. Butowsky, managing partner of Chapwood Capital Investment Management, alleged that Schwab defamed him and his firm in August 2017 due to political reasons, causing Chapwood to lose nearly 270 customer accounts and $45 million in assets under management, or about 19% of the firm's assets at the time. Federal judge Amos Mazzant ruled that the case should head to arbitration and that the federal civil lawsuit would be stayed pending the arbitration proceedings, according to a court document filed Wednesday in U.S. district court in Texas. The move is just "procedural," Mr. Butowsky said, since both parties agreed to send it to arbitration. "I can't wait to get all the facts out and begin to pursue my case," Mr. Butowsky said. A spokesman for Charles Schwab didn't immediately return a request for comment. The lawsuit — Chapwood Capital Investment Management and Ed Butowsky v. Charles Schwab & Co. Inc. et al — relates to Fox News' coverage of the death of former Democratic National Committee staffer Seth Rich. Mr. Butowsky had previously been named as a co-defendant in two defamation lawsuits brought by the staffer's parents and a private investigator, who claimed Mr. Butowsky conspired with Fox News to "concoct a story" about the DNC aide's death. Those lawsuits were ultimately dismissed. Mr. Butowsky claims Charles Schwab "blindly" accepted the defamatory statements about him, and implemented a plan to "defame Chapwood and poach its clients." The firm, Mr. Butowsky claims, did so by sending letters to Chapwood's existing and former clients that described Chapwood and management as "unethical, dishonest and untrustworthy." Mr. Butowsky is seeking compensatory and punitive damages of at least $100 million plus 5% interest.

Latest News

Advisor moves: Wells Fargo Advisors pulls in $9.6b in fresh talent during first half of May
Advisor moves: Wells Fargo Advisors pulls in $9.6b in fresh talent during first half of May

Big-name defections from Morgan Stanley, UBS, and Merrill Lynch headline a busy two weeks of recruiting for the wirehouse.

Why uncertainty is making behavioral coaching more valuable than ever
Why uncertainty is making behavioral coaching more valuable than ever

Markets have always been unpredictable. What has changed is the amount of information investors are trying to process and the growing role advisors play in helping clients avoid emotional decisions

Florida investor hits real estate syndicator with fraud suit over $750K
Florida investor hits real estate syndicator with fraud suit over $750K

Six apartment deals, one "big account," and $2.7M in undocumented insider loans. Now the lawsuit lands

Chicago’s 'Mr. Finance' posed as advisor in loan scheme, according to Illinois regulators
Chicago’s 'Mr. Finance' posed as advisor in loan scheme, according to Illinois regulators

The Illinois order refers to Brandon Ellington’s investment program as a “Ponzi-like scheme.”

Bezos calls for zero income tax on bottom half of earners
Bezos calls for zero income tax on bottom half of earners

But the Amazon executive chair seems to want it both ways, arguing that taxing the ultra-wealthy won't help struggling Americans.

SPONSORED Beyond wealth management: Why the future of advice is becoming more human

As technical expertise becomes increasingly commoditized, advisors who can integrate strategy, relationships, and specialized expertise into a cohesive client experience will define the next era of wealth management

SPONSORED Durability over scale: What actually defines a great advisory firm

Growth may get the headlines, but in my experience, longevity is earned through structure, culture, and discipline